21Shares Files for XRP ETF with US SEC Amid Ripple Lawsuit

Highlights:

• 21Shares filed for a spot XRP ETF to be listed on the Cboe BZX Exchange.
• SEC’s ongoing dispute with Ripple complicates the chances of XRP ETF approval.
• Political changes could influence SEC decisions on cryptocurrency ETF approvals.

On November 1, asset management company 21Shares filed an S-1 registration form with the US Securities and Exchange Commission (SEC) for a spot XRP exchange-traded fund (ETF). If the SEC approves, the new fund, “21Shares Core XRP Trust,” will be listed on the Cboe BZX Exchange. Coinbase Custody Trust Company will serve as its custodian. The trust will track the performance of the XRP coin and offer institutional investors a means to gain exposure to the cryptocurrency.

The company stated:

“The Trust will provide a cost-efficient way for Shareholders to implement strategic and tactical asset allocation strategies that use XRP by investing in the Trust’s Shares rather than purchasing, holding and trading XRP directly.”

Meanwhile, the likelihood of an XRP ETF approval is low, as the SEC has not yet approved any spot XRP ETFs. This uncertainty arises from the SEC’s ongoing legal dispute with Ripple Labs, the company behind XRP, which has alleged since 2020 that Ripple raised $1.3 billion through unregistered XRP sales. However, a 2023 ruling determined that XRP is not a security when sold programmatically on exchanges, but the case is still under appeal.

🚨BREAKING 🚨

21SHARES HAS OFFICIALLY FILED
FOR A SPOT $XRP ETF.

GIGA BULLISH FOR $XRP 🔥 pic.twitter.com/vSSJPYQNZu

— Ash Crypto (@Ashcryptoreal) November 1, 2024

Firms Compete for Crypto ETFs Amid Growing Demand

Over the past year, firms have competed for different crypto ETFs following the SEC’s initial approval of crypto ETFs. In January, the regulator approved 11 spot Bitcoin ETFs and subsequently granted approval for eight Ethereum ETFs. In June, VanEck filed for a Solana ETF, followed closely by 21Shares for a similar product. Last month, Canary Capital submitted a filing to seek SEC approval for a spot Litecoin ETF.

This filing comes after Ripple CEO Brad Garlinghouse recently called an XRP ETF “inevitable,” suggesting rising demand for the product. Other crypto companies, including Canary Capital and Bitwise, are also seeking approval for a spot XRP ETF. 

Bitcoin and Ethereum ETFs have already gained traction, establishing a promising precedent for XRP. However, securing SEC approval for an XRP ETF is challenging due to the agency’s regulatory scrutiny.

Political Speculation on SEC Leadership

The regulator can postpone a decision or invite comments on the ETF filings for months, possibly passing the responsibility to a new administration. Many political analysts have speculated that Democrat Kamala Harris or Republican Donald Trump could replace SEC Chair Gary Gensler if elected.

During the Plan B Forum conference in Lugano, Switzerland, an ETF analyst at Bloomberg Intelligence, Eric Balchunas, stated:

“If [former US president Donald] Trump wins […] he will definitely put in a more libertarian [Securities and Exchange Commission] chair.”

According to a post by Nate Geraci, president of The ETF Store, an investment adviser, cryptocurrency funds made up 13 of the 25 largest ETF launches in 2024 by inflows through August. Geraci mentioned in an X post that Bitcoin has dominated the ETF market this year, making up six of the top ten successful launches.

575 ETFs have now launched in 2024…

*14 of top 30* by inflows are either spot btc or eth ETFs.

Includes 6 of top 10.

There are also 2 MSTR-related ETFs in top 30.

Crypto appetite from tradfi is real. pic.twitter.com/DmD6f5zJ1P

— Nate Geraci (@NateGeraci) October 23, 2024